It’s Alvin and the Chipmunks! No! It’s Glam Rock 07! No! It’s the Happy Little Elves Go to Madison Avenue! Er… no… It’s Newsweek, using the World Bank and IMF for a feelgood story about the global economy.
If you want to read an article where every word can be argued, this would be one of the major efforts of the year.
Take any specious logic, add the global economy, and you get a job that pays well over a million a year.
The essence of this bubbly piece is that while the US and the Western world are learning to pronounce words like “credit crunch”, “housing bust” and “the idiots have done it again”, the rest of the world is doing great.
An excerpt from this slightly premature Christmas present to the reading public:
“…Consider that between 1980 and 2000, the number of countries growing at 5 percent or more hovered around 50. In 2006, 104 nations grew at that rate. When asked to think of a few countries besides China and India that have shown strong growth, World Bank economist Andrew Burns replies: "It's hard to think of somebody who hasn't." In fact, this year the economies of only three countries—Zimbabwe, Fiji and Tonga—are contracting. Two are highly isolated archipelagoes and the former is a hugely dysfunctional dictatorship. Harvard's Ken Rogoff, a former chief economist at the IMF, sums it up simply: "We're in a boom."”
Just for the record, “the rest of the world”, leaving out Europe, North America, Australia, and Japan, is a pretty lousy basis for estimation. The global economy of the 1980s isn't remotely relevant to anything any more. Australia alone has superannuation funds bigger than most of those economies combined. Of these countries, few of them haven’t been previously maimed by Third World debt syndrome, courtesy of the World Bank and IMF. China and India have been working off a combination of domestic bases, and have serious internal problems. China is now experiencing high inflation.
“Growth” is a relative thing.
The article then moves to showpieces of modern economic success stories like Turkey, Mexico, and Argentina and other earthly paradises like Russia and Cambodia. With all the gossamer delicacy of a Master Of Malapropism comes this endearing, heartwarming tale:
“…The retiring loans provoked something of an existential crisis for the IMF, which saw more than 82 percent of its outstanding loans paid back between 2003 and March 2007. Free of debts, developing nations have been able to invest more in health, education and infrastructure, boosting economic growth.”
Who hit them with the loans in the first place? Who wiped out a decade or so and a generation or several in the name of economic management?
This is followed by an intriguing ode to the merits of African democracies as opposed to authoritarian regimes like Iran, Russia and Venezuela.
For those who don’t hide their brains in their underwear, this is pretty funny. For those of us who can read, it would be funny, if it wasn’t Newsweek saying it.
The second page delves into the mysteries of the benefits of high fertility rates in emerging economies, and “growth is good”, that totally unexpected, dazzlingly innovative mindset we’ve always admired from economists.
A figure of $1.3 trillion over three years in direct global investment in emerging economies is trotted out like a recently scrubbed grandchild. In other words, about $620 per year, per human on Earth, compared to the average Western GDP of (very roughly) about $25-40,000 annual per capita.
Another good laugh is available:
“Back in the post-dotcom-bubble days of 2001 and 2002, few economists predicted that the global economy would enjoy the expansion it has. Several years into this new phase of growth, it's still somewhat unclear what it all means. Could emerging markets really carry the global economy through a massive downturn in the United States? Have rich and poor nations really "decoupled"? Will multinational firms leave New York and London for Mumbai en masse?”
Nobody predicted it because nobody was looking at it, or looking for it. The non-US-centric economic view is still new, and this bit of verbose window shopping is a good example of how undeveloped the thinking still is. If they go to Mumbai it’ll be for a working health care system. Or maybe just to find people who answer phones.
Note also that all this “growth” didn’t just happen. Few giant beanstalks involved. There was capital behind it. China didn’t pop up in the pumpkin patch.
Far less forgivable is "Forget the headlines" as a headline. This is selective information, and hardly reflects the revolting state of these "growing" economies in real terms. As information, it's a press release.
Without news, Newsweek is a four letter word.